How the Suns' Sale of $4 Billion Helps Potential NBA Expansion

The Athletic's John Hollinger wrote an interesting piece that detailed how the sale of the Phoenix Suns helps potential NBA expansion.

The sale of the Phoenix Suns signifies a few things. 

It marks the end of tenure for owner Robert Sarver, who was in power for far too long after news of his conduct towards nearly everybody in the building emerged. 

A new era under Mat Ishbia is set to be underway sooner rather than later, and the prospect of different leadership (especially with basketball experience) is exciting. 

The NBA has always found itself at the forefront of innovation, more so in terms of expansion in both a global sense and the amount of teams that actually play in the league. 

In the early 2000's, the league expanded to 30 teams. Now, that number is expected to grow by two, and the recent purchase price of the Suns ($4 billion) all but paves the path for potential cities such as Seattle and Las Vegas to host their own teams. 

The Athletic's John Hollinger explains:

"Basically, it makes it seem almost inevitable that we’ll have two new teams within the next half decade. (Not breaking any news here, but every single person I asked thinks those teams will be in Seattle and Las Vegas. My personal crusade for Bali and Kauai appears to have gained little traction.)," said Hollinger.

"If you want to understand why the Phoenix sale is so important to this, do the math. The biggest obstacle to expanding from 30 teams to 32 is not a lack of available markets in which to sell tickets or pipe in local TV broadcasts. It’s because they dilute the national TV money."

Hollinger then heads into some math that none of really have time for, but basically: Two new teams would take away from the current pool of dough they receive from national TV deals. The only way to make up for that would be a substantial expansion fee to enter the league, and with a current NBA franchise recently going for $4 billion, the price point is practically set:

"Most observers I spoke with see a Vegas team as being of similar or slightly greater value than Phoenix, and a Seattle team as being worth considerably more. Suppose, for argument’s sake, it was $4 billion for Vegas and $5 billion for Seattle. That’s an instant $300 million windfall for every owner … and a roughly 17x ratio to the diluted TV money," Hollinger said.

"Nonetheless, let’s exit the financial weeds here and conclude with the big-picture takeaway from this exercise. If the expansion fees were $3 billion, it would seem like a close call for the league’s owners to approve it.

"If it’s at $4 billion? It’s a no-brainer."

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